AMP has tempered expectations of a substantially higher bid for Axa Asia Pacific Holdings (Axa APH), saying it would only acquire the operations at a price that is responsible.

"Combining with Axa would accelerate the delivery of key parts of our strategy and make us even more competitive, but it only makes sense at a price that's economically responsible," AMP chief executive Craig Dunn said in an address to the Trans Tasman Business Circle in Melbourne yesterday.

"While the proposed merger with Axa is a transaction we want to do, it's not a transaction we have to do."

AMP argued it has plenty of alternative choices to grow the business.

"We have significant opportunities for organic growth in our businesses in Australia and Asia," Dunn said. "As the lowest cost provider in the industry, we have a large capacity for competitive response."

Speculation AMP would raise the price surfaced after Axa APH rejected the $12 billion joint offer with French insurer Axa SA.

Axa APH said the offer substantially undervalued the company.

Rumours of a higher price were further fuelled by the $3.2 billion capital raising Axa SA initiated shortly after the bid, giving it more room to sweeten the offer.

If successful, the merger with Axa would provide a good counterbalance against the consolidation in the financial services industry and the dominance of the big four banks, Dunn said.

"Australians can only benefit from having an even stronger, home-grown non-bank competitor in this market," he said.

A successful merger would deliver greater choice of products and services and lower costs for advice, Dunn said.

He even flagged that the combined business could look to expand into the retail banking sector.

"AMP also has its own retail banking licence, which we'd like to develop and grow more strongly over time," Dunn said.

"This merger will enable the combined company to offer those competitive banking services to more Australians, and it will increase the financial resources we have to back our bank's continued growth."

In the same speech, Dunn also said AMP would gradually raise the superannuation contribution it pays for its employees from 10.5 per cent to 12 per cent by 2014.